Why Brand Valuation Matters

Brand rating and evaluation is like giving a report card to a brand. It involves assessing how well a brand is perceived by its target audience. This considers factors like customer satisfaction, brand awareness, brand loyalty, and how well the brand delivers on its promises. It’s basically measuring a brand’s health and effectiveness

Brands are far more than just company logos or font, it’s even beyond the products or services a company offers. It’s the powerful entities that evoke emotions, influence purchasing decisions, and the driver of customer loyalty. The brand is the rationalization behind consumer’s choice.

The annual Top Brands League Table  helped in giving perspective into this. It is a recognition of brands that excel in building strong connections with consumers.

But what exactly determines a brand’s true value? This is where brand valuation comes in.

Understanding Brand Valuation: More Than Monetary

Brand valuation goes beyond a simple price tag. It’s a comprehensive evaluation of the worth of a brand as an intangible asset and its perception in the mind of the target audience. The TOP 50 BRANDS NIGERIA® evaluation and ranking is a non-financial valuations, it highlights brands that demonstrate exceptional strength across various dimensions.

And why it matters –

For brands aspiring to reach the coveted Top 50 League list, understanding brand valuation is crucial. Here’s why:

• Strategic Decision-Making: A brand valuation exercise provides valuable insights into a brand’s strengths, weaknesses, and competitive landscape. This empowers companies to make informed decisions regarding marketing investments, brand extensions, and mergers and acquisitions. That is why leading brands, like Globacom, MTN Nigeria, First Bank of Nigeria etc will always conduct brand valuation to assess their position in the market and identify areas for strategic investment in network infrastructure, consumer enagement and various innovations, based on user’s experiences and feedbacks or customer service initiatives to solidify its position.
• Building Brand Equity: Brand valuation sheds light on brand equity, which refers to the added value a brand provides to a product or service. A strong brand, like Dangote Cement, Coca-Cola will consistently ranked high on the TOP 50 list, commanding a premium price due to their established reputation for quality, availability and reliability. Understanding brand equity allows companies to focus on strategies that enhance the perceived value of their offerings.
• Negotiation Power: A data-driven brand valuation empowers companies during negotiations. Imagine a brand like GTBank, known for its innovative digital banking solutions, using its strong brand valuation to negotiate favorable partnerships or secure better loan terms.

Various Brand Valuation Methods:

Now that we understand the significance of brand valuation and its connection to the TOP 50 Brands Nigeria ranking, there are various methods of valuing brand. It’s important however to understand that there are other metrics for measuring a value, other than money. Value could be measured in terms of material, could be sentimental and many more. Here are some of the brand valuation methodologies being used for various purposes.

1. Market-Based Approach:

This approach looks at recent market transactions involving similar brands. Imagine a company considering acquiring a beverage brand similar to Coca-Cola, a consistent TOP 50 contender. The market-based approach would analyze recent acquisitions of comparable beverage brands to estimate the target brand’s value.

2. Income-Based Approach:

This method focuses on the future profitability of a brand. It estimates the future cash flow a brand is expected to generate and then discounts it to arrive at a present value. For instance, a financial institution like Zenith Bank, a prominent name on the TOP 50 list, could utilize this approach to assess the present value of its projected future earnings based on its strong customer base and brand loyalty.

3. Cost-Based Approach:

This approach estimates the cost of replicating a brand’s current position in the market. Imagine a leading retail chain like Shoprite, often recognized for its brand experience. The cost-based approach would consider the expenses involved in establishing a similar brand presence, including marketing costs, store infrastructure development, and brand building activities.

Choosing the Right Method:

There’s no single “one-size-fits-all” method for brand valuation. The most appropriate approach depends on various factors, including the availability of market data, it couls include the brand’s financial history, but particularly the purpose of the valuation exercise.

For the annual TOP 50 BRANDS NIGERIA, the Brand Strength Measurement (BSM) model is used.

Demystifying the BSM Model: 

The TOP 50 BRANDS NIGERIA® ranking utilizes the Brand Strength Measurement (BSM) model. Understanding this model is crucial as it reflects the very essence of what makes a Top-Rated Brand in Nigeria. The BSM model assess brands across seven key variables, that tests consumer’s knowledge and affinity, also most importantly. factors that mostly influence their buying decisions.

The seven variables are:

1. Popularity Evaluation (Top of Mind – TOM): This measures a brand’s spontaneous recall, indicating how readily consumers think of the brand within its category. A classic example is Coca-Cola, consistently ranking high on brand awareness within the Nigerian beverage market.
2. Online Engagement: In today’s digital age, online presence is paramount. The BSM model considers a brand’s website functionality, social media engagement, and online reputation management to understand how effectively brands connect with their digital audience. Think of a retail giant like Jumia, known for its user-friendly e-commerce platform and active social media presence, fostering strong online engagement with its customers.
3. Innovation (Products/Services, Marketing): Consumers crave novelty, and the BSM model recognizes brands that consistently innovate. This could be innovative product development like a phone company like Globacom launching a new data plan with faster speeds or creative marketing campaigns like Airtel’s initiatives promoting mobile money transfer services.
4. Category Leadership: Dominating a particular category is a mark of a strong brand. The BSM model evaluates a brand’s market share and dominance within its industry. Think of a leading cement company like Dangote Cement, a household name synonymous with cement in Nigeria.
5. Quality: Building trust hinges on product and service quality. The BSM model evaluates aspects like certifications, warranties, and consumer feedback to understand how effectively brands deliver on their quality promises. Think of a food brand like Golden Penny, consistently ranked on the TOP 50 list, known for its commitment to maintaining high-quality standards.
6. National Spread: A truly national brand caters to a diverse audience across the country. The BSM model ensures brands have a significant presence in at least half of the states or geographical zones, demonstrating a commitment to serving the entire Nigerian market. Think of a bank like First Bank, with branches spread across various parts of Nigeria, ensuring accessibility to its financial services.
7. Corporate Social Responsibility (CSR): Socially conscious consumers are drawn to brands that give back to their communities. The BSM model considers a brand’s CSR initiatives, highlighting its commitment to ethical practices and positive social impact. Think of a leading oil and gas company like Shell Nigeria, actively involved in education and community development projects, showcasing its dedication to social responsibility.

These seven pillars of brand strength form the foundation for a Top-Rated Brand in Nigeria

Beyond the Numbers: The Intangible Value of a Top Brand

While brand valuation methods provide some estimations in terms of monetary or other metrics, the true value of a the Top-Rated Brand in Nigeria extends beyond numbers.

• Brand Loyalty: Top brands cultivate a loyal customer base that consistently chooses their products or services over competitors. This loyalty translates into reliable revenue streams and a strong market position. Think of a consumer electronics brand like LG, consistently ranked on the TOP 50 list, known for its loyal customer base that appreciates its product quality and reliable after-sales service.
• Customer Advocacy: Loyal customers become brand advocates, promoting the brand organically through word-of-mouth recommendations and positive online reviews. This “earned media” is invaluable for building brand trust and attracting new customers. Imagine a telecommunications company like Globacom, recognized for its strong network coverage, inspiring its satisfied customers to recommend their services to friends and family.
• Brand Differentiation: Top brands stand out from the crowd with a unique brand identity and a compelling brand story. This differentiation allows them to command premium prices and attract a premium customer segment. Think of a luxury fashion brand like Mai Atafo, known for its exquisite designs and commitment to ethical production practices, differentiating itself in the competitive fashion industry.

Building a Brand Worthy of the Top 50 List:

Here are some key takeaways for brands aspiring to earned the coveted TOP 50 ranking and achieve exceptional brand value:

• Focus on Customer Centricity: Obsess about understanding your customers’ needs and exceeding their expectations. Prioritize customer feedback, actively address concerns, and personalize your communication and offerings.
• Embrace Innovation: Don’t be afraid to disrupt the status quo! Invest in research and development, stay updated on industry trends, and continuously explore new ideas to keep your brand relevant and exciting.
• Craft a Compelling Brand Narrative: A powerful brand story resonates with your target audience. Communicate your brand values, mission, and purpose authentically and consistently across all touchpoints.
• Leverage the Power of Digital: Create a user-friendly and engaging online presence. Optimize your website for mobile responsiveness and utilize social media effectively to connect with your audience and build a strong online community.
• Champion Corporate Social Responsibility: Develop a robust CSR strategy aligned with your brand values. Support local communities, contribute to social causes you care about, and promote environmental sustainability. This fosters brand loyalty and positions your brand as a responsible entity.

Conclusion: Beyond the Rankings, Building Enduring Brand Value

While a coveted spot on the TOP 50 Brands Nigeria® list brings prestige and recognition, the ultimate goal is to build a brand that resonates with consumers on a deeper level. By understanding brand valuation, implementing effective strategies, and fostering a strong connection with your audience, you can pave the way for lasting brand success. Remember, the true reward is not just a ranking, but the trust, loyalty, and admiration of your Nigerian consumers.